India Aspiration Fund (IAF) and SIDBI Make in India Loan for Enterprises (SMILE)

PM Modi thundered “Start-up India, Stand up India” during his Independence Day speech in Delhi, in order to inspire more Indians into entrepreneurship. The best part is that, the talks are transforming into concrete action.In a new push for assisting startups and SMEs, Govt. has launched two new investment and loan programs with a combined budget allocation of Rs 12,000 crore.

Finance Minister Arun Jaitley launched two funds the India Aspiration Fund (IAF) and SIDBI Make in India Loan for Enterprises (SMILE) under Small Industries Development Bank of India (SIDBI) in line to carter funding for start-ups and to aid small enterprises in India. SIDBI under the first fund India Aspiration Fund (IAF) would invest in venture capital funds for meeting the equity requirement of MSME start-ups and for this the initial corpus of Rs. 2,000 crore has been set. Life Insurance Corp. of India (LIC) will be a partner and co-investor in this fund. Under second fund the SIDBI Make in India Loan for Enterprises (SMILE) is a debt-fund which will carter soft term loans to MSMEs to meet debt-to-equity norms and pursue growth opportunities, SIDBI has set Initial corpus of Rs. 10, 000 crore under SMILE fund.

India Aspiration FundFinance Ministry launched a unique investment program, described as ‘fund of funds’, which will invest in various VC funds for meeting the equity requirement of MSME start-ups. Hence, instead of directly funding in startups, India Aspiration Fund (IAF) will help the VCs to come up with newer investment ideas and protocols.Besides infusing crores of funding into SMEs, this will also create lakh of new jobs.

In a statement, SIDBI described the objective of IAF to “catalyze tens of thousands of crores of equity investment into start-ups and MSMEs (micro and small enterprises), creating employment for lakhs of persons, mostly educated youth, over the next four to five years,”

SIDBI Make in India Loan for Small Enterprises (SMILE)In association with SIDBI, Govt. has launched another innovative loan program for SMEs, named as SIDBI Make in India Loan for Small Enterprises (SMILE). A budget of Rs 10,000 crore has been earmarked for SMILE.Focused on the 25 sectors under PM Modi’s Make in India vision, SMILE will offer quasi-equity and term based short term loans to Indian SMEs which will have less stringent rules and regulations.Together, these two Govt. initiated programs will help to create more than 20 lakh direct and indirect jobs in the country.Another Govt. scheme called Micro Units Development and Refinance Agency (MUDRA Bank) is already under process, wherein Rs 20,000 crore has been earmarked for developing startups in India.